Highest in 14 years--hmm I guess that means the worst was in Clintons 2nd year--right before Rebs took over congress. Would that be correct?
I wasn't going to comment--but since you asked
Would you like for me to elaborate further--like passed bill removing sageguards that enabled the mortgage/bank fiasco--or whose been in charge of fannie/freddie--what about who tried to change it and who wouldn't let it come to vote.-what about the #1 benefactor of Fannie/freddie contribution in 4 years he was in senate?
Is that enough for you for starters?
Now I'll give you a chance--which bill did GW pass or veto that caused financial meltdown or what other way do you think he contributed it?
1994 Economy:
Summary and the Fed?s Preemptive Strike Against Inflation
The U. S. economy in 1994 went gangbusters. Real gross domestic product (GDP), the value of all final goods and services produced in the U. S. adjusted for inflation, grew at an annual rate of 4.1 percent, which represents the highest growth rate of real GDP since 1984. As Figure 1 shows, real GDP grew at an annual rate of 3.3 percent in the first quarter, increased to 4.1 percent and 4.0 percent in the second and third quarters, and jumped to a whopping 5.1 percent in the fourth quarter.
FIGURE 1: Real Gross Domestic Product Rate
The unemployment rate, as Figure 2 shows, declined throughout the year, starting at 6.7 percent in January and declining to 5.4 percent in December. Non-farm payroll employment increased by an average of 294,000 per month, representing the highest percentage increase in payroll employment since 1988. Manufacturing jobs increased by an average of 30,000 per month.
FIGURE 2: United States Unemployment Rate
Inflation, as measured by the Consumer Price Index (CPI), dropped to only 2.6 percent, the lowest annual rate since 1986. Short-term and long-term interest rates increased throughout the year as the Federal Reserve tightened monetary policy and the booming economy raised the expectation of future inflation.
With the economy booming and at full employment, the Federal Reserve correctly became concerned about an increase in inflation. A booming economy is wonderful if it is sustainable, but a booming economy at full employment cannot be sustained and will eventually drive up inflation as the economy overheats.
To slow the economy to a sustainable growth rate and prevent higher inflation, the Fed?s policy-making arm, the Federal Open Market Committee (FOMC), raised interest rates eight times from February 1994 through February 1995. Specifically, the Fed raised the federal funds rate (the rate banks charge other banks for overnight loans) from three to six percent in a series of actions designed to prevent inflationary pressures from becoming embedded in the economy.
Slowing down a booming economy never makes the Fed popular. In 1994 the Fed took additional criticism because the much-feared inflation it was supposedly fighting did not appear in the 1994 monthly inflation numbers. Yet the Fed continued its tightening of monetary policy?raising interest rates?anyway. With inflation generally static, why did the Fed keep fighting it?
The answer revolves around the fact that monetary policy?changes in the money supply and interest rates?does not impact the economy quickly, but with a considerable lag. Tightening monetary policy has little impact on inflation for six to nine months, and does not have its full effect on reducing inflation for about 1? to 2 years. Such extended lags force the Fed to prevent an increase in inflation by launching a preemptive attack on inflation. The inflation the Fed fought in 1994 was not the inflation for early-to-mid 1994. It was too late for the Fed to impact those inflation rates. In 1994, the Fed was fighting inflation for late 1994, 1995, and even 1996.
If the Fed waits for inflation to show up before it acts, it will be too late. As Fed Vice-Chairman Alan Blinder is fond of saying, the Bunker Hill strategy?wait until you see the whites of their eyes and then fire?does not work for monetary policy. If you wait to see the whites of their eyes, you?re dead. If the whites of their eyes are showing inflation, you?re about one year too late to prevent it.
